WASHINGTON — Under the healthcare proposals now before Congress, insurance companies would no longer be able to charge higher prices to policyholders who had diabetes or cancer, became pregnant or were severely overweight.
But the far-reaching clampdown on insurers leaves one highly controversial element untouched: the issue of charging higher premiums to older policyholders than to younger, presumably healthier consumers who are less likely to file costly claims.
Under the provisions of the bill passed by the House on Saturday, as well as in the probable Senate version, insurers will be able to charge middle-aged consumers at least twice as much as they do younger customers.
And depending on the ultimate language of the Senate bill, insurers could be allowed to demand four times as much.
"There's no argument that healthcare spending for older adults is substantially higher than younger adults," said Linda Blumberg of the Urban Institute, a Washington think tank that has studied the matter. "The issue is how we want to distribute those costs."
Experts use the arcane-sounding term "age rating," and they discuss it in terms of ratios -- as in a 2-1 formula or a 4-1 formula. Behind the jargon, the issue has huge financial and other implications for millions of Americans and the insurance industry.
For example, according to a recent Urban Institute study, if the age-rating ratio were set at 2 to 1, a typical 58-year-old policyholder would pay about $5,900 a year for health insurance. If the age rating were 4 to 1, the premium could jump to $8,650.
Conversely, a 24-year-old would pay about $2,965 under a 2-1 rating system, but the premium could fall to $1,880 if the 4-1 ratio were used.
Advocates for older Americans argue that age rating amounts to discrimination, gives insurers a back-door way to deny coverage to those who need it most, and imposes serious hardship on many middle-aged people who are years away from being eligible for Medicare.
"Age is an immutable characteristic. I can't make myself younger," said Natale Zimmer, policy director for OWL, an advocacy group for middle-aged and older women. "To charge someone more simply based on age really amounts to discrimination."
Some advocates argue that even a 2-1 ratio is overly punitive and ignores the fact that an in-shape 52-year-old can be healthier than an overweight 28-year-old.
The insurance industry says age rating is necessary to make coverage affordable for younger people, whose participation in the system is crucial to keeping the overall costs of insurance down for everyone.
Because young consumers submit fewer health claims than their older peers, their premiums help cover the costs of older consumers who file bigger claims.
"Over time, in order for it to be a solvent insurance pool, you have to do one of two things: raise premiums for everyone or figure out a way to get more people into the pool," said Jason Grau, an analyst with Oliver Wyman, a consulting firm that has studied the effects of age rating nationwide on behalf of the industry.
Age rating is widespread at the state level. In some states, the ratio can be 10 to 1 or even much higher. In California, a 2.5-1 ratio is used. In Illinois, it's 4.2 to 1.
In Washington, the House is committed to a 2-1 ratio. Senate leaders are grappling with a bill produced by the Finance Committee, which allows a 4-1 rating ratio, and another version passed by the Senate Health Committee, which stipulates 2 to 1.
The industry says that if the final bill carries a 2-1 rating, those younger than 25 will see their premiums jump by 90% and anyone younger than 50 will see their insurance rates increase at least somewhat.
But Blumberg says young people are more likely to benefit from the government subsidies to buy insurance that will be offered to those who make incomes slightly above the federal poverty level, reducing the overall cost to them.
Meanwhile, depending on the ratings, older people could have both higher costs and higher out-of-pocket expenses because they are more in need of services.
"It really is a double whammy as you get older," Blumberg said.